investors who want low risk<\/a><\/strong> while preserving their capital may seek investments with low volatility.<\/p>\n\n\n\nThe values considered low volatility do not fluctuate as much as other investments.<\/p>\n\n\n\n
“If you’re thinking why someone would buy a low volatility investment, [they] have a desire to reduce risk,” says Sam Febbraro, executive vice president of Investment Planning Counsel.<\/p>\n\n\n\n
But there is a compromise. It is difficult to reduce risk and convert performance on the moon.<\/p>\n\n\n\n
As a result, these investments can sometimes underperform in a rising market.<\/p>\n\n\n\n
But in theory, they should be less volatile to the downside.<\/p>\n\n\n\n
A low volatility investment strategy focuses on reducing volatility or risk relative to the stock index<\/a><\/strong>, says Jeet Dhillon, vice president, and senior portfolio manager at TD Wealth Private Investment Counsel.<\/p>\n\n\n\n“Low volatility strategies use risk as the primary metric to determine whether to include or exclude particular stocks and what the optimal weighting will be for stocks included in a portfolio.”<\/p>\n\n\n\n
What is Low Volatility Investing?<\/strong><\/span><\/h2>\n\n\n\nLow volatility investing is a style of investment that buys stocks or securities with little or low volatility by avoiding those with high volatility.<\/p>\n\n\n\n
This investment style utilizes the Low Volatility anomaly.<\/p>\n\n\n\n